Generate professional replies to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
Step 1 – Issue Identification & Review
The AI analyses your query, notice, order, or uploaded documents and identifies the key issues involved.
• Review the issues identified by the AI • Add, edit, remove, or refine issues as required
Step 2 – Draft Generation
Once you approve the issues, the AI performs issue-wise legal research and prepares a structured draft response.
• Relevant statutory provisions • Judicial precedents and Supreme Court, High Court and other citations • Issue-wise legal analysis • Practical arguments and supporting content • Professionally structured draft ready for further review.
Tribunal allows appeal: No disallowance for personal expenses by directors in Private Limited Company The tribunal allowed the appeal, holding that there should be no disallowance of expenses for personal use by directors in a Private Limited Company. ...
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Tribunal allows appeal: No disallowance for personal expenses by directors in Private Limited Company
The tribunal allowed the appeal, holding that there should be no disallowance of expenses for personal use by directors in a Private Limited Company. Citing judicial precedents, the tribunal emphasized that no disallowance can be made for personal expenses on cars used by directors. Any amount related to personal use by director-employees should be treated as a perquisite in their hands. Consequently, the tribunal deemed the disallowance of depreciation on cars for personal use unjustified and deleted the addition.
Issues: Confirmation of disallowance of depreciation on cars for personal use by directors of the assessee company.
Analysis: The appeal pertains to an order by the CIT(A)-1, Pune for the assessment year 2012-13. The sole issue raised is the disallowance of depreciation on cars for personal use by directors of the assessee company. The AO disallowed Rs. 2,08,267, being half of the depreciation claimed, as the cars were not purchased in the name of the assessee but its directors, invoking section 38(2) of the Income-tax Act, 1961. The AO's acceptance of ownership of cars in the name of the assessee company is evident from allowing depreciation at 50% of the claimed amount. However, the tribunal noted that there cannot be any disallowance of expenses in the hands of a company for personal use, even by its directors, citing judicial precedents.
The tribunal highlighted that as a Private Limited Company, there should be no disallowance of expenses due to personal use by directors. Citing the decision of the Hon'ble Gujarat High Court in Sayaji Iron and Engineering Company vs. CIT, it was emphasized that no disallowance can be made for personal expenses on cars used by directors. The tribunal also referred to similar views taken by the Delhi Bench of the Tribunal in various cases. It was concluded that any amount related to personal use by director-employees should be treated as a perquisite in their hands. Consequently, the tribunal held that the CIT(A) was unjustified in upholding the disallowance and proceeded to delete the addition. The appeal was allowed, and the order was pronounced in the Open Court on 30th January 2019.
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